Question

Outsourcing production will question 6 options: reduce fixed costs and increase variable costs. reduce variable costs and increase fixed costs. have no effect on the relative proportion of fixed and variable costs. make the company more susceptible to economic swings. save previous pagenext page

Answer 1

Reduce fixed costs and increase variable costs.

Step-by-step explanation:

Outsourcing allows firms to spend less on fixed costs like equipment, fixed salaries of employees, and other resources like technology and insurance. Some of the firm's fixed costs will be converted to variable costs, but these can be controlled more easily by changing production and other factors.